Watch That Cable TV Bill

On April 1, federal law regulating prices for expanded basic cable service expired. Not surprisingly, some cable companies have already announced price increases. By one estimate, even with regulation cable costs have increased by 24 percent since 1996. Consumer advocates blame a lack of competition. Consumer Correspondent Herb Weisbaum reports for CBS News Saturday Morning on how one city took the lead in supplying cable to its citizens.

"I'm so happy I don't know what to do with myself. I feel fortunate every day I turn on that TV," says cable customer Damon Monroe.

It's not very often you hear customers singing the praises of their cable companies. But Damon Monroe couldn't be happier.

Last summer, he was the very first customer to sign up for Click! Network, a publicly-owned cable operation run by the city of Tacoma, Washington. The city decided to build its own cable system from scratch after hearing from too many citizens who were fed up with the existing private cable company.

On Click!, Monroe gets a better picture, more choices, and 31 digital music channels, all for less than he was paying his old cable company. "I think right now we're 100 percent better than what we had before," says Damon.

Nationwide, thousands of people have complained about cable prices that have increased at three and four times the rate of inflation.

The lifting of price controls won't help that trend. The change will not affect "basic cable," which includes the broadcast networks and PBS channels, or fees for set-top boxes or remote controls. But it lifts controls on "expanded" packages, which include stations like CNN and ESPN. Prices for premium channels like HBO and Cinemax have never been regulated. Nine out of 10 cable subscribers get expanded service.

Josie Martin, a representative of the National Cable Television Association, says cable companies need higher rates so they can improve their product. "The cable companies are investing in new technology, in new services, in new programs, in better pictures, better quality sound," she says.

In Tacoma, Click! Network says it's already delivering those things and something else cable customers have been demanding: respect.

"We want them to be pleased. Satisfied. Completely satisfied. Ecstatic, if possible!" said Diane Lachel of Click! Network.

So far, Click! has signed up more than 4,000 people, and wired about half of Tacoma. But the utility says the whole city is already benefiting.

Since Click! signed on, the existing private cable company has added channels and improved service while holding the line on prices.

The trouble is, very few communities have cable competition.

Some customers have switched to satellite. But for most people, that's not the answer, according to Consumers Union, the independent nonprofit testing and infrmation organization that publishes Consumer Reports magazine.

"You need to buy a dish. The installation is expensive. You can't get your local broadcast signals," says Gene Kimmelman of Consumers Union.

Consumers Union says people need to tell Congress to re-regulate cable to prevent price gouging and to do more to encourage real competition.

Right now, only about three percent of Americans have a choice of cable providers. Consumers Union says that in places where there is competition, prices are about 10 percent lower than in communities with just one cable company.

The recent deregulation is the result of a decision made three years ago as part of the Telecommunications Act of 1996. Congress put a three-year limit on price regulations, thinking that there would be more competition by now. That competition didn't materialize, but the price controls still expired April 1.

For more on the deregulation of cable rates, see CBS MarketWatch Cable Price Cap Phasing Out.

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